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When the Auditor Attempts to Understand the Operation of the Accounting

question 87

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When the auditor attempts to understand the operation of the accounting system by tracing a few transactions through the accounting system, the auditor is said to be


Definitions:

Bottom-up Analysis

An approach that starts with specific details and flows upwards to identify broader trends and patterns.

Top-down Analysis

An approach that starts with the broader economy or market before analyzing specific sectors or companies.

Predicted Total Sales

An estimation of the total amount of sales revenue a business expects to earn over a specified future period.

Proxy Products

Items or services used as substitutes to represent the value or functionality of another product during analysis or experimentation.

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